Mcilraith’s Measure Of Prosperity

This note was originally much more elaborate, because I had a very complicated account of what I thought McIlraith was trying to do. And then I worked out the following. A bit of a let down, but here to save others doing the same.

Keywords: Statistics;

James Wordsworth McIlraith (1877-195?[1]) is best remembered for his monograph The Course of Prices in New Zealand: An Inquiry Into the Nature and Causes of the Variations in the Standard of Value in New Zealand; later he would become chief inspector of primary schools, retiring in 1939.

He was principal witness to the 1912 Royal Commission on the Cost of Living, on which sat his LLD thesis supervisor, James Hight, then professor of economics and constitutional history at Canterbury University College.

In the course of giving evidence, McIlraith introduced an index of ‘prosperity’, which he also called the ‘volume of consumption per head’ for the 1880 to 1911 period. The entirety of the relevant transcript, as reported in the Royal Commission’s hearings, is appended. It gives the index, but there is no account of how it was constructed, nor what might be the component parts.

In the course of using it I observed there were similarities with a volume import per head I was using. So I took nominal imports per head and deflated them by his non-farm price index, which in various places he and John Condliffe called an ‘import price index’. The match with the prosperity index became suspiciously similar.

It became even closer when I I used the 1878 to 1897 series in place of the 1880 to 1899 series. The each begin with a level of 131 and end with 96. This suggests that McIlraith accidentally used the wrong series. (I happened to find this by making the same mistake myself.) The match is so close – rounding errors aside – that I am confident that is how McIlraith calculated his prosperity series.

(However the match is near perfect only until 1907. It is a poor match for 1908 and 1909 but back on track in 1910. I am unable to identify why. Arithmetically if both non-farm prices indexes are increased by 5 to 97 and 98 respectively, the alignment joins the earlier figures. However, I cannot give any reason they should be, except they give the right numbers..)

My conclusion is that McIraith’s ‘prosperity index’ is in fact a volume imports per capita series. As it happens for various reasons I dont object to that, but regrettably it does not add anything to that which we already know.

Endnote

In the course of following up McIlraith’s life story I came across two contributions to the Economic Journal:

They are not only invaluable in adding to an understanding of McIlraith’s thinking, but they extend his aggregate price indexes to December 1913. (He had already advised the Royal Commission of an updating to 1911 albeit in the case of only one measure.) [2]

Appendix: Extract for Evidence to the 1912 Royal Commission on the Cost of Living [3]

155 James Hight: In the reference [of the Royal Commission] the term ‘the higher standard of living’ is used: ‘standard of comfort’ would be a better term probably: do you recognise that the standard of comfort is different from the cost of living?

James McIlraith: Yes; quite a different thing.

156 JH: Take New Zealand at the present time: do you think the standard of comfort of the lowest grade workers – say, the casual labourer – casual labourer in the city – is such that he has a sufficient supply of the necessaries of life, and, in addition, some luxuries?

JM: I think so.

157 JH: Have you sufficient personal knowledge of their condition to give a definite answer?

JM: I must say I am not very intimate with it, except from my knowledge of public schools. From the observation of the children I should say the standard is fairly high. Of course, there are other factors to be taken into consideration, such as scientific methods of home management. A wage that would maintain a high standard of comfort in one household might be utterly insufficient in another.

158 JH: Owing to unskilful management?

JM: yes.

159 JH: You think, I suppose, the standard of comfort of general workers is such that they can afford something more than the necessaries of life?

JM: Yes.

160 JH: Has that always been the case in New Zealand in the last twenty years?

JM: I should say it has not.

161 JH: Have you noticed changes in the standard of comfort?

Yes.

162 JH: Could you describe in detail any changes you have noticed?

JM: The changes I have noticed are principally in matters of dress. I know practically from my own experience that in a matter of dress and clothing the standard has risen very much. In the matter of food, both as to quantity and quality, the standard has risen considerably. In the matters of education, recreation, travel, and postal and telegraphic conveniences the standard seems, in my opinion, to have risen a great deal. Investigations that I made into consumption per head seem to indicate that there has been a very rapid rise during the past twenty years.

163 JH: Have you any detailed information?

JM: I have in my hand a table showing the prosperity of the people of New Zealand in quinquennial priods. According to my investigations, the period from 1887 to 1891 the lowest standard that New Zealand has experienced since [1880] [4], judging the standard of comfort by the volume – not the value – of the things consumed in New Zealand. I may say that that same period was the period when 20,000 more people left New Zealand than entered it. For that period the standard worked out at 98.[5] The full table is as follows.

[Table of Average over Quinquennial Periods omitted. They can be derived from individual year data also presented to the Royal Commission on the next page.]

These figures show that in the years 1907-11 we consumed per head almost twice as much in volume – again I would say not in value – as we did during the period between 1887-1891. Each person consumed approximately twice the volume that was consumed per person twenty years ago.

Volume of Consumption per head

1880 102

1881 123

1882 144

1883 131

1884 123

1885 122

1886 112

1887 104

1888 97

1889 98

1890 95

1891 108

1892 108

1893 106

1894 103

1895 111

1896 121

1897 122

1898 125

1899 146

1900 160

1901 155

1902 174

1903 183

1904 171

1905 187

1906 188

1907 196

1908 196

1909 171

1910 191

1911 195

Endnotes

[1] McIraith appears in the 1951 Who’s Who but not in the 1956 edition.

[2] A useful piece of biographical information is that The Economic Journal records his location in 1914 as Auckland. Presumably he had left Canterbury and embarked on his ultimate career in education. There is an indication in his evidence to the Royal Commission that he was already involved in school teaching (para 157), although he was also a teaching assistant to Hight and to the lecturer in law (probably T. A. Murphy). He went to the Christchurch Normal School, where he may have been a pupil teacher. N. C. Phillips (ed) A History of the University of Canterbury 1873-1973, p.142.

[3] AJHR, 1912, H-18 p.973-975.

[4] The text says ‘1860′, but is almost certainly a transcription error. There is no other evidence that McIlraith’s series went back before 1880.

[5] There is no indication what the index is based on; in no year was it 100.